Capital Gains Tax or CGT is a tax on the gain or profit you make when you sell anything, give away or otherwise dispose of something. It applies to assets that you own, such as bullion, shares or property. There's a tax-free allowance and some additional reliefs that may reduce your Capital Gains Tax bill. Most bullion investors will never have to pay this tax due to the size and value of their investment, however it is important that investors know where they stand.

 
Capital Gains Tax is only payable if an investor realises over £10,600 of profit in the 2012/13 financial year. Be mindful that the £10,600 limit is not the total value of selling your bullion, but purely the profit made from your original outlay. For example, if an investor brought some gold bullion in 2009 for £30,000 and sold it in 2012 for £40,600, no Capital Gains Tax would be due as only the £10,600 profit made is taken into consideration. However, this single transaction would constitute the investors full tax free allowance for the year and any other profit made would be taxable at a rate between 18-28% - the rate you pay will depend on your total taxable income. Gains above the basic rate limits are charged at 28%. Please note the tax free limit of £10,600 is only set for the financial year of 2012/13 and is reviewed every year. To access the Capital Gains Tax section of the HMRC website at www.hmrc.gov.uk/cgt/ for more information. This does not apply to the sale of sovereigns which are CGT free.

Please note it is the responsibility of the individual investor and not that of the Gold Dealer to declare any Capital Gains Tax payable. The gold dealers, along with all other companies, are required to keep records of all transactions made for 7 years, however they do not voluntarily forward details on to the HMRC unless specifically requested.

Capital Gains Tax Exempt Bullion
Are there any CGT exempt bullion products? The simple answer to this commonly asked question is yes. Capital Gains Tax is exempt on all British legal currency. This includes gold Britannia coins in all sizes, silver Britannia coins; gold Sovereigns in all sizes including Proof sets, and the one pound gold coin, two pound gold coin and five pound gold coin. Meaning, you can make an unlimited tax free profit on investments of any size and value on all these British legal currency bullion coins. CGT is payable on all other gold and silver coins which do not fall into the category and all gold and silver bullion bars are taxable.

How to Avoid Paying Capital Gains Tax on Gold?
Many investors choose to invest in smaller unit gold coins or smaller gold bullion bars in order to pay no CGT, or as little CGT as possible when selling their gold bullion. This can be avoided or minimised by part selling bullion over more than one financial year.

Buy CGT Free British Gold Coins
Despite British gold bullion coins attracting a slightly higher premium than Krugerrands, most UK investors buy gold sovereigns and half sovereigns for smaller units, and gold Britannia coins for larger 1 oz units. Both British gold coins are Capital Gains Tax exempt and offer the ultimate flexibility for investors.

With wealthy gold investors in mind, anyone planning on spending a substantial amount of money on gold should look no further than sovereigns and the gold Britannia coin. To help highlight the potential benefits of buying British gold coins, a gold investment of £50,000 in September 2007 would be worth over £150,000 in November 2011. If this gold investment was made in any way other than British gold coins the gain would be liable to Capital Gains Tax. Therefore the tax saving to a CGT paying person looking to realise this investment would be up to £28,000. As the gold price continues to increase and the investor chose to hold on to their gold the tax savings will be even greater.

If you have any further questions regarding Capital Gains Tax please click the following link to visit the CGT section of the HMRC website: http://www.hmrc.gov.uk/cgt/

 If you have any questions please feel free to contact our knowledgeable and friendly sales team on 01253 675756 who will be happy to talk your through any queries you may have. Alternatively, you can e-mail us on: mrjamescstewart@btinternet.com and we will get back to you as soon as possible.